Which of the Following Statements Is False

question 42

Multiple Choice

Which of the following statements is false?

• A) Because investment in permanent working capital is required so long as the firm remains in business, it constitutes a long-term investment.
• B) Because temporary working capital represents a short-term need, the firm should finance this portion of its investment with short-term financing.
• C) Temporary working capital is the difference between the lowest level of investment in short-term assets and the permanent working capital investment.
• D) The matching principle states that short-term needs should be financed with short-term debt and long-term needs should be financed with long-term sources of funds.

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